Opinion: Why the re-opening of China is good news for UAE’s economy

After three long years, the world’s second largest economy, has opened its doors again. On January 8, China officially bid farewell to Covid-19 restrictions, and reopened its borders to travellers coming in and going out of the country.

It’s hoped that China’s return to the world will bring a much-needed boost to the global economy. The first industries expected to reap the benefits of China’s reopening are the travel and tourism markets. In pre-Covid days, Chinese travellers were the world’s biggest source of revenue for the international travel market, contributing $253bn to the global economy back in 2019. So, when other nations gradually began to ease their travel restrictions, China’s absence was sorely felt.

As a key economic trade partner and popular tourism destination for Chinese visitors, the UAE has good reason to welcome the news of China’s reopening. Here’s why…

UAE-China: Shared goals

China and the UAE already has a long-standing history of mutual, respect, friendship and collaboration. Both countries share the same visions and objectives for driving innovation, talent and new technologies towards a more robust and sustainable economy.

China is a major importer of oil from the UAE. Between 2019 and 2020 it was one of the fastest growing export markets for crude petroleum from the UAE. In 2020, it imported $8.6bn out of the UAE’s $42bn total in crude oil exports.

However, before and during the Covid years, there’s been a significant move towards non-oil trade on both parts. In 2021, China was the UAE’s biggest non-oil trade partner, accounting for 12 per cent of the UAE’s non-oil foreign trade.

China ranks the UAE first in the Arab world among its 20 most important countries for investing. In 2021, non-oil trade between the two countries totalled almost $60bn, resulting in a 27 per cent growth on the previous year.

Despite the pandemic, collaboration between the two countries has continued to flourish. In the first eight months of 2022, China-UAE bilateral trade exceeded $64bn. According to Ali Obaid Al Dhaheri, the UAE ambassador to China, this trade volume is on track to reach $200bn by 2030.

In the post-Covid recovery era, the ties and collaboration between the two countries are sure to deepen, as they look to expand and diversify their partnerships into new market sectors.

UAE’s role in the ‘Belt and Road’ initiative

Since its conception in 2013, the UAE has been an avid supporter of the Belt and Road initiative – China’s ambitious plan to create a 21st century ‘Silk Road’, connecting Asia with Africa and Europe via land and sea, in order to stimulate economic growth on a transcontinental scale.

Thanks to its favourable location, modern infrastructure and strong trade relationship, the UAE has fast become China’s ‘gateway to the world’.

There has been significant Chinese investment in the building and upgrading of seaports and airports in the Gulf region over the last decade to facilitate BRI trade.

• Dubai DXB is now one of the most efficient and busiest airports in the world.
• Khalifa port in Abu Dhabi has been chosen as the centre of Middle East operations for China’s COSCO Shipping, the largest container operator in the world.
• Today, the UAE is responsible for over 60 per cent of China’s exports to the MENA region.
• A fast-growing global FinTech hub, the UAE is also leading the way in education, science, technology and AI development, all of which are a major interest for Chinese BRI investment.

Unsurprisingly, the pandemic and the crisis in the Ukraine have caused major disruptions and delays to BRI projects, especially in the developing partner countries. As a major logistics and tech hub for the MENA region, the UAE will become even more important to China as a leading player in the future success of BRI development.

Green partnership

The impact of the Covid-19 pandemic has also highlighted the urgent need to act on climate change. As two main players in the supply and demand of oil and gas, the UAE and China have a major responsibility to invest in sustainable solutions to reduce carbon emissions.

Both countries are committed to driving innovation towards a greener, cleaner future. China’s path to carbon neutrality by 2060, echoes the UAE’s Net Zero by 2050 target, and in the last few years, the two countries have been working closely together on sustainability initiatives, especially in the solar energy sector.

Chinese expertise and investment have contributed to the development of three of the world’s largest solar parks, all based in the UAE:  Noor Abu Dhabi, Mohammed bin Rashid, and Al Dhafra.

This year’s United Nations Climate Change Conference, COP28, hosted by the UAE, will give China a fantastic opportunity to showcase their expertise, opening the doors to further collaboration in clean energy and green technologies with the UAE. Their mutual sustainability goals will not only benefit the planet, but also help boost the economies of both countries through bilateral investment.

Tourism and aviation

As part of the ‘Projects of the 50’ campaign to boost economic growth through non-oil revenues, The UAE recently launched its ‘Tourism Strategy 2031’. The strategy aims to increase tourism investment and revenue. It’s anticipated that the tourism sector will contribute Dhs450bn to the GDP by 2031, positioning the Emirates as one of the best destinations for tourists in the world.

The reopening of China brings a massive sigh of relief to the UAE tourism industry. Dubai especially, is preparing to welcome back Chinese tourists.  Out of 17 million visitors to the city back in 2019, almost a million were from China.

Three years of absence have been a double blow for the UAE. Not only were Chinese visitor numbers among the highest pre-Covid, but they were also among the biggest spenders. It’s estimated that Chinese consumers have built up around $836bn in unspent savings during the pandemic – some of which they’ll be eager to start spending again in tourism-rich cities such as Dubai.

The easing of restrictions and gradual return to normality will also bring a much-needed boost to the UAE’s aviation industry.   Anticipating a surge in demand from Chinese leisure and business travellers, UAE flag carriers, Etihad and Emirates are planning to increase UAE-China flights over the coming months.

A mutually beneficial future

Thanks to their mutual commitment towards development and progress, collaboration between the UAE and China is certain to continue in the future.

Cooperation in the science and technology spaces have already proved mutually beneficial. In 2021, the two countries partnered in a joint venture to develop and manufacture the Sinopharm/Hayat-Vax Covid-19 vaccine, the first to be produced in the Arab world. The success of the inoculation campaign, one of the fastest undertaken, could prove to be a driver in further life sciences and biotech collaborations between the two nations.

Other exciting future collaborations include space technology and exploration, artificial intelligence, 5G telecommunications and genetic technology.

The first impact of China’s post-Covid recovery are bound to be felt in the travel and tourism sectors. But while China has been stuck in enforced hibernation, the UAE has been busy, facilitating the path towards new opportunities for foreign investors and businesses. The recent 100 per cent foreign ownership law and Golden Visa programme are sure to attract an influx of interest from Chinese investors and talent looking to access trade, economic and investment opportunities in the Middle East.

After three years of uncertainty, one thing we can predict for sure: China will recover from the dark days of pandemic. And thanks to a healthy partnership of trust and mutual gain, the UAE will continue to play a strategic part in the future of both economies.